How has offshore wind become so cost-effective and what are the consequences?

Transcription

1 Analyst PRESENTATION Delivering renewable energy insight How has offshore wind become so cost-effective and what are the consequences? Steen Broust Nielsen

2 MAKE, Wood Mackenzie and GTM Research We guide companies leading the electricity transformation into the new energy economy GTM, MAKE & Wood Mackenzie form the premier market intelligence provider on the decarbonization and decentralization of energy Power & Fuel Market Fundamentals Long-term Supply & Demand Outlooks 20-year Wholesale & Retail Price Outlooks Regional Market Dynamics Policy and Regulation Analysis Thermal and Renewable Plant Databases Technology Value Chain Evolutions Wind, Solar, Storage, and Grid Edge Competitive Landscapes Technology Cost and Performance Outlooks 2

3 MAKE, Wood Mackenzie and GTM Research Our products span global regions and technologies POWER AND FUEL MARKETS WIND POWER SOLAR PV ENERGY STORAGE GRID EDGE Global Energy Global Offshore Wind Global Downstream Global Energy Grid Edge Markets Wind Premium Plus Solar Storage Global Executive North America Power Package U.S. Utility-Scale Solar Council Europe Energy» Onshore & Offshore U.S. Distributed Solar China Gas & Power» Market Reports PV Module Supply Chain Southeast Asia Gas» Databases PV Systems & & Power Technologies 3

4 Average MW rating Offshore Wind Cost OWE scaling Doubling in capacity expected in next 4 years Comulative installed OWE capacity (MW) 35,000 AMER 30,000 EMEA APAC 25,000 20,000 15,000 10,000 5,000 X2 X2 7,500 Average turbine size Global offshore wind (MW) X2 Global Offshore 0 Source MAKE e 18e 19e 20e e 18e 20e Technology, rapidly increasing economies of scale, learning effects are key enablers of cost reduction if offshore wind. 4

5 Offshore Wind Cost Turbine rating is the primary product differentiator for offshore Rapid offshore turbine size development Larger offshore turbines reduce balance of plant costs on a per MW basis, with potential to lower OPEX Turbine ratings in the offshore sector have increased significantly over the past five years Current offshore order backlogs include more than 70% volume in the greater than 5.0MW segment Sub-6MW turbines are obsolete in the EU, with turbine OEMs quickly meeting demand for larger rating turbine demand by uprating existing turbine models without changing rotor diameters Despite long project cycles and R&D timelines, commercial demand continues to favor the largest turbines, the next generation of +12MW turbines will gain market share within the next five years Offshore technology evolution <3MW % 18% MW 5% 2,207 30% 66% MW 71% 24% 29% 55% 16% Note: Segmented by grid connected date. Orders include firm and unconditional to be installed during 2017 and beyond Source: MAKE 4% 1% 8MW and above 10,715 11, Orders +12MW products are expected to be announced in the timeframe, driving OEMs to develop fundamentally different technology for key components 5

6 Offshore Wind Cost Record low offshore subsidy prices increase confidence in sector Recently awarded subsidies EUR/MWh 200 EUR/MWh 200 LCOE development, e 150 East Anglia Neart na Gaoithe Horns Rev 3 Borselle I & II Hornsea Two Gode Wind 3 Borssele III & IV Triton Knoll Moray 100 Industry s 2020 target 50 0 Danish Nearshore Tender Note: Time of award of subsidy Source: MAKE Kriegers Flak Strike price He Dreiht OWP West Borkum Riffgrund West II Subsidy cap e Note: LCOE level at FID. Source: MAKE 22e Germany UK 25e Netherlands Year Outcome of the first German tender indicates that Germany and the UK will follow the Netherlands below ~60EUR/MWh in LCOE by 2022 on a FID basis. 6

7 Offshore Wind Cost Offshore wind moving towards and beyond onshore LCOE in some markets Wind energy LCOE by country 2017 (EUR/MWh) Solar energy LCOE by country 2017 (EUR/MWh) Turkey UK Iran Germany France Global India Egypt Brazil South Africa Saudi Arabia Morocco Mexico China US Turkey Brazil Iran Egypt UK France South Africa Germany China Global India Morocco Mexico US Saudi Arabia AMER Europe APAC MEA Global Note: All LCOE data shown in Nominal 2017 EUR/MWh. FX: (EUR/-) USD:0.90, BRL:0.30, GBP:1.17, ZAR:0.72, INR:0.13, RMB:0.14. Only key markets shown. Source: MAKE Key markets in the Americas and Middle East have LCOE leadership due to hyper-competitive auction results. Turbine pricing and low cost of capital are critical for future LCOE reductions 7

8 Offshore Wind Cost Offshore wind cost reduction from multiple drivers including learning and scale effects Turbines & plant Substructures Transmission O&M Risk & financing Larger turbines and wind farms Scale effects Installation Porfolio effects Experience & learning Standardised and optimised offshore foundation design and design criteria Industrialised manufacturing ebop optimisation of substation and transmission capex Grid transmission planning, sourcing and design Operational synergies Low OPEX turbines Economies of scale Risk management Financing Lower IRR expectations Source: Siemens, MHI-Vestas, DONG, MAKE 8

9 Offshore Wind Cost Offshore wind segment to triple in share of global market Global grid-connected forecast: e (GW) % 7-8% 9-15% % 6% 7% 8% 7% 9% 11% 11% 14% 14% 15% e 18e 19e 20e 21e 22e 23e 24e 25e 26e Source: MAKE Offshore markets Onshore markets Offshore growth largely to be European until 2020 after which Chinese offshore is expected to be a key driver for global offshore 9

10 Renewable Energy Intelligence Suite MAKE s Offshore Subscription The optimal offshore tool box Wind Turbine Trends Report Offshore Wind Power Market Report Wind Turbine O&M Report Renewable Energy Ownership Strategies Report 5 Databases > 6 Research Notes Offshore related Flash Notes Offshore related Analyst Presentations 4 Wind Power Market Outlook Updates The Offshore subscription is an offshore-specific toolbox of wind power research, insights, data and analytical support, in which MAKE delivers a multi-faceted view of the global offshore wind industry with unrivaled depth and accuracy, offering you a competitive advantage in accelerating your business results. 10

11 Renewable Energy Intelligence Suite A flexible suite of leading wind and solar intelligence tools MAKE now offers eight different subscription packages 11

12 Renewable Energy Intelligence Suite Subscription overview 12

13 Renewable Energy Intelligence Suite Subscription overview 13

14 Renewable Energy Intelligence Suite Subscription overview 14

15 Thank you Steen Broust Nielsen consultmake.com These materials, including any updates to them, are published by and remain subject to the copyright of MAKE Consulting A/S ( MAKE"), and are made available to clients of MAKE under terms agreed between MAKE and those clients. The use of these materials is governed by the terms and conditions of the agreement under which they were provided. The content and conclusions contained are confidential and may not be disclosed to any other person without MAKE s prior written permission. MAKE makes no warranty or representation about the accuracy or completeness of the information and data contained in these materials, which are provided 'as is'. The opinions expressed in these materials are those of MAKE, and nothing contained in them constitutes an offer to buy or to sell securities, or investment advice. MAKE's products do not provide a comprehensive analysis of the financial position or prospects of any company or entity and nothing in any such product should be taken as comment regarding the value of the securities of any entity. If, notwithstanding the foregoing, you or any other person relies upon these materials in any way, MAKE does not accept, and hereby disclaims to the extent permitted by law, all liability for any loss and damage suffered arising in connection with such reliance. Denmark Sønder Allé 9 DK-8000 Aarhus T U.S. 117 N. Jefferson Street Suite 400 Chicago, IL T U.S. 33 Bradford St Concord MA T China No. 19, 470 Shaanxi Bei Road, Jing an District Shanghai T Germany Neuer Wall Hamburg T